AT&T said its rival bid, a combination of cash and stock, exceeded the value of the Comcast deal by 17 percent. The offer is 26 percent above MediaOne's current market value, AT&T said.

An AT&T deal would make the nation's largest telecommunications company also its No. 1 cable TV company.

AT&T, which completed its acquisition of cable giant Tele-Communications Inc. last month, has 12.5 million cable subscribers. MediaOne has 5 million. Time Warner, the largest, has 12.6 million subscribers. In the Chicago area, an earlier deal will give AT&T control of MediaOne subscribers this spring.

AT&T is in the market for cable companies because it plans to use cable to deliver a combination of phone service, high-speed Internet access and interactive entertainment to millions of U.S. homes.

Although AT&T is the nation's largest long-distance company, it has stumbled using more conventional methods to break into the lucrative local phone market.

AT&T Chairman C. Michael Armstrong said in a statement, "Americans have been waiting for someone to run another wire to their homes to give them a choice in local phone service and deliver the advanced services they expect in a competitive market."

The deal would save AT&T $175 million to $200 million in costs, the company said.

The company acknowledged it would cut profits by about 30 cents per share in the first year after completion, but the company said profits would rise after that.

AT&T has structured the cash-and-stock deal so that if AT&T's share price drops, MediaOne shareholders would be protected from a decline in the amount they would be paid.

AT&T also would assume $4.5 billion in MediaOne debt and other obligations.

AT&T announced its rival bid after the close of financial markets Thursday. The company detailed its offer in a letter to MediaOne Chief Executive Charles M. Lillis. AT&T has already won the support of Amos Hostetter, whose family is MediaOne's biggest shareholder, with about 13 percent of the company.

MediaOne is a spin-off of U S West, which decided in 1997 to exit the cable TV business.